Chile and China have long-standing relations. Chile was the first South American country to establish diplomatic relations with China in 1970, the first to recognize China as a market economy and support its entry into the World Trade Organization, and the first individual country to sign a free-trade agreement with China.
Today, China is Chile’s principal trading partner while Chile is China’s second-largest trading partner in the region. This partnership was reflected in bilateral trade, which amounted to more than $33.93 billion in 2014. However, despite these excellent trade figures, Chinese investment in Chile remains a pending challenge.
According to the Chilean Central Bank, investment from the Chinese mainland and China’s Hong Kong reached $477 million between 2009 and 2013, a very low figure compared with investment from Japan, at $3.797 billion, which positioned the country as Chile’s largest Asian investor.
“There is no single reason that explains this behavior,” said Jorge Pizarro, executive vice-president of the Foreign Investment Committee CIEChile, Chile’s investment promotion agency.
“There are information, cultural and business gaps that we need to narrow so that Chinese investment comes to Chile and, at the Foreign Investment Committee, we are working on that,” he said.
In conjunction with the ProChile export promotion agency and Chile’s embassy in Beijing, CIEChile has been engaged in investment promotion work with Chinese companies. It has received numerous Chinese delegations interested in different sectors of the economy, including mining, energy, infrastructure and manufacturing, while representatives of the agency have participated in seminars, meetings and other events in China.
In 2014 alone, CIEChile helped 135 Chinese companies interested in learning more about investment opportunities in Chile. This accounted for 24.6 percent of all the advisory services provided by CIEChile’s investment attraction executives.
It is important to remember that a Chinese province can have the size, population and output of a South American country. CIEChile has, therefore, also worked at regional and provincial levels to promote investment and strengthen ties. In 2014, it signed investment promotion agreements with Guangzhou and Shenzhen in addition to its existing agreements with Chongqing and the Chinese Ministry of Commerce’s Investment Promotion Agency.
Chinese investment is welcome in Chile. China’s high technological standards and the development of its manufacturing industry will, without doubt, contribute to the strengthening and diversification of Chile’s export basket as well as to help achieve the government’s goal of attracting more and better investment.
Similarly, Chile’s network of trade agreements and its connectivity will allow Chinese businesses to use our country as an excellent international platform from which to penetrate more markets.
China Construction Bank’s arrival in Chile is a very powerful sign of Chinese interest in the country. A branch of this bank is expected to start operations this year now that it has completed all the legal procedures for its opening.
Its installation certainly reflects the prospects the financial institution sees in Chile for business of this type and it will be a good platform for investment by Chinese companies.
“We are quite optimistic that the bank’s arrival will help close the gaps in business culture that exist between the two countries and permit an increase in the entry of Chinese capital,” said Pizarro.
The story is provided by The Foreign Investment Committee (CIEChile).